US Dollar (USD) Set to Gain Ground against Japanese Yen (JPY), but Major Resistance at 150.30 Remains Elusive
The US Dollar (USD) has been on an upward trend against the Japanese Yen (JPY) in recent weeks. According to UOB Group’s FX strategists Quek Ser Leang and Peter Chia, this trend is expected to continue, as the USD gains momentum. However, reaching the major resistance level at 150.30 may still be a challenge.
Underlying Factors
The strengthening of the USD against the JPY can be attributed to several factors. One significant factor is the diverging monetary policies of the Federal Reserve (Fed) and the Bank of Japan (BoJ). The Fed has signaled its intention to raise interest rates this year, while the BoJ has maintained its ultra-loose monetary policy.
Another factor is the stronger economic data coming out of the US. The US economy has shown signs of recovery, with the unemployment rate falling to a pre-pandemic level of 3.6% in April. In contrast, Japan’s economy is still struggling to recover from the pandemic, with its unemployment rate remaining high at 2.7%.
Resistance at 150.30
Despite the positive outlook for the USD, reaching the major resistance level at 150.30 may be a challenge. This level has acted as a strong resistance point in the past, and it is likely that it will continue to do so.
However, UOB Group’s FX strategists believe that the USD could eventually break through this resistance level. They note that the increase in momentum indicates that the USD could strengthen towards 150.30 in the longer run.
Impact on Individuals
For individuals holding JPY and looking to travel or make international transactions, the strengthening USD could lead to higher costs. For example, Japanese tourists planning a trip to the US may find that their money goes further than before, while US tourists in Japan may find that their money buys less.
Impact on the World
The strengthening USD could have broader implications for the global economy. A stronger USD makes US exports more expensive, which could negatively impact US companies that rely on exports. On the other hand, it could make US imports cheaper, which could benefit US consumers.
Furthermore, a stronger USD could lead to a reduction in demand for safe-haven assets like the JPY and gold. This could have implications for investors who have allocated their portfolios towards these assets.
Conclusion
In conclusion, the US Dollar (USD) is expected to continue its upward trend against the Japanese Yen (JPY), but reaching the major resistance level at 150.30 may still be a challenge. The underlying factors driving this trend include diverging monetary policies and stronger economic data coming out of the US. Individuals holding JPY could be impacted by higher costs for international transactions, while the broader implications for the global economy remain to be seen.
- The US Dollar (USD) is expected to continue its upward trend against the Japanese Yen (JPY).
- Reaching the major resistance level at 150.30 may still be a challenge.
- Diverging monetary policies and stronger economic data coming out of the US are driving this trend.
- Individuals holding JPY could be impacted by higher costs for international transactions.
- The broader implications for the global economy remain to be seen.
